Council of the Law Society of NSW v Xu [2009] NSWADT 67

Set aside by Appeal :

CITATION: Council of the Law Society of NSW v Xu [2009] NSWADT 67

DIVISION: Legal Services Division

APPLICANT Council of the Law Society of New South Wales PARTIES: RESPONDENT Chang Yuan Xu

FILE NUMBER: 072028

HEARING DATES: 4-8 August 2008

SUBMISSIONS CLOSED: 7 November 2008

DATE OF DECISION: 30 March 2009

BEFORE: Greenwood J - Judicial Member; Riordan M - Judicial Member; Hayes E - Non-Judicial Member

CATCHWORDS: Solicitor – Disciplinary application –professional misconduct, failure to witness signatures, retention of documents

LEGISLATION CITED : Legal Profession Act 2004

Law Society of NSW v Beverly [2008] NSWADT 252 CASES CITED: Re City Equitable Fire Insurance Co Limited (1925) CH407 Sheffield v Eden (1878) 10 ChD 291 Vallant Hooker & Partners v Proceedings Commissioner [2001] 2 NZLR 357

APPLICANT P Boyd, solicitor REPRESENTATION: RESPONDENT K Traill, barrister A Kumar, solicitor

1. That the Solicitor pay a fine in the sum of $3,000.00 ORDERS: 2.That the Solicitor be publicly reprimanded 3.That the Solicitor pay the Law Society's costs in all matters as agreed or assessed.

1 In August 2007 , the Council of the Law Society of New South Wales (" the Law Society") filed in the Tribunal an Application for Original Decision seeking disciplinary action under the S551 of the Legal Profession Act 2004 ( " the Act") be taken against the solicitor Chang Yuan Xu. The orders sought by the Law Society were :. 1.That the Solicitor pay a fine. 2.That the Solicitor be publicly reprimanded. 3.That the Solicitor pay the Society's costs of the proceedings. 4.Such other and other orders as the Tribunal deems appropriate 2 The solicitor appeared and was represented. Both the Law Society and the Solicitor had come to an arrangement, after directions were made on an application, to hear the two complaints as separate matters on the grounds of procedural fairness and because different interpreters were required for different Chinese language dialects. Both sets of complaints were heard by the same Tribunal members and as separate matters. 3 The Law Society's application was brought pursuant to Section 551 of the Act provides Commencement of Proceedings: 1)Proceedings may be commenced in the Tribunal with respect to the whole or part of a complaint against an Australian legal practitioner by an application ( a disciplinary application) made by the Commissioner or a Council in accordance with this Chapter and containing one or more allegations of unsatisfactory professional conduct or professional misconduct . 2)An allegation in the disciplinary application must relate to the subject matter of the complaint but need not be an allegation made in the original complaint or have been the subject of separate or further investigation under this chapter 4 The Law Society brought its case for professional misconduct against the Solicitor on three grounds: 1. The Solicitor held out that he had witnessed the signature of Jian Juan Liu on the contract for the purchase of Unit 21 ,109-123 O'Riordan Street Mascot, when he had not. 2. The Solicitor knowingly provided a false S66W certificate dated 6th November 2003. 3. The Solicitor improperly imposed a lien . 5 The grounds upon which the Law Society relies arose out of two sets of complaints in two matters conducted by the Solicitor. 6 Matter of Zhang and Liu ( First Complaint) a)Ground 1 of the first complaint – The solicitor holding out that he had witnessed the signature of Jian Juan Liu on the contract of purchase when he had not witnessed the signature. b)Ground 2 of the first complaint-. The Solicitor knowingly provided a false S66W certificate dated 6th November 2003. 7 Matter of Zhang and Liu The facts of the matter are as follows: a)On 15th October 2003, the Solicitor received instructions from Rong Zhang to act on his behalf in the purchase of a property at Unit 21, 109-123 O'Riordan Street, Mascot. b)On 6th November 2003 the Solicitor forwarded a letter on behalf of the purchasers, Rong Zhang and Jian Juan Liu to Robert Wehbe and Partners as Solicitors for the Vendors which said, in part, "we refer to the abovementioned matter and enclose the contract signed by purchaser by way of exchange on the basis that your letters have a return contract signed by the Vendor to complete the exchange. We also enclose a Section 66W certificate and a copy of the Deposit Bond". c)On page 1 of the contract, enclosed with the letter to Robert Wehbe and Partners, appeared the signatures of two persons described as the purchasers. Appearing on the line beneath these signatures is the signature of the Solicitor, immediately below which appears the word "Witness". d)The Section 66W Certificate enclosed with the letter dated 6th November 2003 and signed by the Solicitor provided, in part: 'CERTIFICATE I CHANG YUAN ZU, of LAWSIDE LAWYERS Certify as follows: (a)… (b)I am giving this certificate in accordance with S66W of the Conveyancing Act 1919 with reference to a contract for the sale of Property 21/109-123 O'Riordan Street Mascot NSW from Ralang SAAB Pty Limited to Rong Zhang & Jian Juan Liu in order that there is no cooling off period in relation to that contract (c)… (d)I have explained to (i)the effect of the contract for the purchase of that property; (ii)the nature of this certificate; (iii)the effect of giving this certificate to the vendor'. 8 The Solicitor received a contract and instructions from a Mr Zhang only in relation to a Contract of Sale. 9 The Solicitor had a conference with Mr Zhang and apparently went through the contract of sale with him in or about the 14th or 15th October 2003. At this meeting the Real Estate Agent, Mr Xue also attended. The contract was uplifted from the solicitors office by Mr Zhang . 10 Some time later, Mr Zhang returned to the Solicitor's office and delivered the contract of sale to the Solicitor's secretary, called "Icy". The Solicitor gave evidence that he heard the client Mr Zhang speak to his secretary when the contract was returned and the client said to his secretary words to the effect of " My wife also want to purchase the property and I want to put his name on it and he signed the contract ." The name put on it "," yeah , she signed the contract". 11 The Solicitor readily acknowledged that he had not added the name to the contract and he had not witnessed Ms Liu's signature. In evidence given by the Solicitor, he acknowledged that the Section 66W certificate was signed by him without reading the document or filling in any names on the contract . 12 The Solicitor's Secretary issued the contract and the Section 66W certificate to the Vendor's Solicitors, Robert Wehbe and Partners. The Vendor's Solicitors issued a letter of confirmation that contracts had exchanged on 11th November 2003. 13 The matter came to the notice of the Law Society on complaint by Ms Liu when she wished to rescind the contract and escape a loan agreement. Other evidence was tendered as to loan documentation and indentity documents which had been tampered with. Further evidence was also tendered by Jian Juan Liu that she was overseas from 5th October 2003 to 20th November 2003, the precise time during which the matter and documents were being prepared and processed and that as the second purchaser named in the contract and S66W certificate, she was not actually in Australia to sign the contract and the signature represented was not hers. 14 The Solicitor's response to the Law Society case and evidence tendered by him principally went to his view that the he was the victim of a fraud and tampering with the contract, including the insertion of the female purchasers name, was by the Mr Zhang or some other person. The solicitor throughout the hearing of the matter conducted his case on the basis that he sought to prove he was not dishonest. In doing so, he failed to concede the Law Society's grounds, that once he heard the client's conversation with his secretary, which he deposed to in evidence and had known all along , that there was a obligation on him firstly to correct the contract , so that he was not representing that he had witnessed two purchasers signatures and secondly to check documents and correspondence before they left his office, thirdly that he had a professional obligation not to sign a S66W certificate representing he had given legal advice to the two purchasers , when he had only advised the male purchaser. This preoccupation by the Solicitor in seeking to show he did not tamper with the documents and was not therefore dishonest, did not assist him in the presentation of defending the case brought before the Tribunal . 15 The Tribunal was made aware and the Law Society was clear that its investigation of the matter had indicated to the Tribunal and the Solicitor, that the solicitor himself was not involved in any fraud or act of deliberate dishonesty involving the actual tampering with the loan documents or the actual adding of the female purchaser's name to the contract. Therefore his dishonesty was not a matter for the Tribunal to consider . 16 The Law Society contended that the S66W certificate was false as the Solicitor, at the time of the exchange, had not met the female purchaser, had not provided that purchaser with legal advice and had not witnessed her signature. Nor did he have instructions to act for her. It is the Law Society's case, that once the solicitor was on notice that a new purchaser had arisen , the solicitor did not take the prudent steps to ensure the contract and the S66 W certificate, as legal documents, were in truth a correct and legal representation of what they purported to be . 17 It was not until and during cross examination of the Solicitor on the 6th August 2008 that he gave to the effect as follows: "I was careless. I was careless. I did not read it. I did not check. I sign. It's my mistake." Later under cross-examination, the Solicitor said: "Yes, I signed it. ….. It's wrong. It's my mistake. I should have got instructions from the client so it's clear. I'm very sorry." When the Solicitor was asked: "But you never explained it to Ms Liu, did you?" The Solicitor answered: "No".